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Industry Data Needed to Address Flawed Methane Rule

We hear it time and again: “Regulations should be based on sound science.” But so often, they are not.

A glaring example of bad public policy based on a lack of scientific data is the Environmental Protection Agency’s (EPA) “Quad O Methane Rule,” which amends the New Source Performance Standards to reduce emissions from new and modified oil and gas facilities.

This rule, as is, will have a profound effect on virtually every oil and gas producer in the U.S. According to the EPA, any modification to a well will make it susceptible to the rule.

In many ways, industry seems to think it can just wish this one away. There are companies that naively believe “my wells won’t be impacted.”

But the impacts are real, and thus far, industry has been unable to turn it around in the courts.

In late July, the Court of Appeals for the District of Columbia Circuit ruled that the EPA must enforce the Obama Administration rule, which was issued on June 3, 2016, to amend the New Source Performance Standards and reduce methane emissions from new and modified oil and gas facilitates. The EPA had planned to delay implementation of the rule while it worked to repeal it.

The rule dashed hopes by oil and gas producers that the Trump administration could easily repeal it.

EPA rules concerning methane emissions impact all producers, particularly, small oil and gas operators. The EPA’s decision to no longer exempt marginal wells from the Leak Detection and Repair (LDAR) requirements was developed based on very limited data.

The costs of compliance may have great economic impact on energy production. Not only will producers feel the effects, but states and communities will be negatively affected, too. The rule might make hundreds or even thousands of marginal wells uneconomic, resulting in revenue losses in the hundreds of millions for several states. It will also affect tax revenues, especially federal revenues from royalties collected on BLM lands. It is in the interest of all oil and gas producers, states and the federal government to avoid these impacts.

To repeal or modify the methane rule, the EPA must have enough good data to demonstrate the real impact that oil and gas wells are having on methane emissions. Even the EPA has admitted that its rule was based on assumptions and very little real data. Without data to dispute its assumptions, the courts have been unwilling to allow the EPA to delay or modify the rule.

RSPEA, a research consortium of oil and gas producers, service companies and research universities, is managing a joint industry project with U.S. oil and gas industry partners to conduct and manage a real-world survey that will determine the precise levels of methane emitting from smaller wells in the U.S. RPSEA has been developing the study plan and team for the past year.

RPSEA has already developed the protocol for the study and a study team is in place. It intends to sample at least three basins within a year. But it needs funding from industry sponsors. The Independent Petroleum Association of America (IPAA) and U.S. Oil and Gas Association (USOGA) are supportive of the study, and a few state trade associations are pooling funds, providing cash and well sites. There’s also a commitment from the Department of Energy (DOE) to provide up to $500,000 in matching funds if industry can fund the same amount.

If this study is not completed, and rule changes are not initiated by the end of 2018, with permanent changes made, there is a good chance the EPA will not have the political support to modify the methane rule – all because we didn’t have enough good data to fight the rule.

The window for turning this around is short. Let’s not blow it.

Jack Belcher is executive vice president for HBW Resources and consults energy and transportation clients on government relations, regulatory affairs, situational risk management, coalition building and stakeholder relations. He is also Managing Director of the National Ocean Policy Coalition.